Obligations of a taxpayer at cessation of business

IT IS the duty of every registered operator to notify the Commissioner General of ZIMRA, in writing, of his/her intention to cease operations and apply to be de-registered. The reasons for cessation of business operations include but are not limited to; ◆ Deregistration of a company by

Registrar of Companies; ◆ Liquidation of a company; ◆ Insolvency of the business; ◆ Dissolution of a partnership

business; ◆ Death of a sole trader. On cessation of trade, a taxpayer who was registered for any tax head is supposed to fulfil the de-registration requirements as detailed below:

Value Added Tax (VAT)

Value Added Tax Act [Chapter 23:12] Section 24 requires any person who intends to have his/her VAT registration cancelled to apply in writing to the Commissioner General of ZIMRA to cancel his/her registration on VAT 5 form.

Also, a person is obliged on cessation of trade to notify the Commissioner General of ZIMRA in writing, within 21 days of the date of such cessation on VAT 5 form.

Once the Commissioner General is satisfied that the registered operator has complied with all his/her obligations as laid down in the VAT Act, which include payment of all outstanding debts, the submission of all outstanding returns, availing of all records for a final audit and any other such conditions as the Commissioner General sees fit, a notice of cancellation shall be issued.

What happens to the Invoice Management System/fiscal device on de-registration of the taxpayer? ◆ The IMS device must be surren

dered to ZIMRA; and ◆ Erased data from the IMS device will be retained in the IMS system; PAYE Income Tax Act [Chapter 23:06] Paragraph 2(2) of the Thirteenth Schedule details that any person who ceases to carry on any business or who was registered as an employer shall, within 14 days after ceasing to carry on any business or to be an employer, notify the Commissioner General of ZIMRA in writing, of his/ her having ceased to carry on business or ceased to be an employer.

Income Tax

Companies Act [Chapter 24:03] Section 320, details that the Registrar of Companies may strike a defunct company off register where he/she has reasonable grounds to believe that a company is not carrying on business or is not in operation.

Duties of a taxpayer upon cessation of trade

◆ Submit all requested outstanding returns to enable a final de-registration audit to be conducted; ◆ Pay all outstanding amounts; ◆ The client who request for deregistration must provide proof from the Registrar of Companies that the applicant has been deregistered (by the Registrar of Companies). After having fulfilled the above obligations and any other such conditions, the Commissioner General of ZIMRA shall issue a notice of cancellation of registration of either a contract account/revenue head or Business Partner.

Reminder for payment of tax;

Our valued clients are reminded that the 2nd QPD and Value Added Tax (VAT) for the month of May 2016 are due on or before 25th June 2016

Disclaimer

This article was compiled by the Zimbabwe Revenue Authority for information purposes only. ZIMRA shall not accept responsibility for loss or damage arising from use of material in this article and no liability will attach to the Zimbabwe Revenue Authority.

Report corrupt activities anonymously by calling:

Toll Free Econet Line 0808 190 Toll Free Telecel Line 0732 880 880 WhatsApp 0772 135 690 E-Mail: zimraanticorruption@ gmail.com

Please note that the toll free hotline is managed by an independent service provider.